Rates Won’t Rise: Bouris
Home buyers should not be concerned that interest rates are going to rise soon, says mortgage finance entrepreneur Mark Bouris.
The founder and chairman of Yellow Brick Road says recent Reserve Bank statements on monetary policy showed the central bank wasn’t about to move on interest rates, contrary to the view of many market commentators.
Bouris says mortgage affordability is one of the positive factors on the supply side of the real estate market that could lead to improving housing affordability in the short term.
But he says buyers believe that property prices are too high and this is causing a slowdown in the demand for property.
Bouris says property is still a good asset class to invest in and investors should have a long term strategy of at least seven years.
Duty Changes Inspire FHBs
New research has found that first-home buyers are returning to the market, most likely because of recent changes to the stamp duty requirements in New South Wales and Victoria.
The CoreLogic Property Pulse for October found that, in August, there were 10,227 owner-occupier first-home buyer finance commitments, the greatest number since December 2009. It represented 17.2% of all owner-occupier housing finance commitments, which is the highest proportion since July 2013.
Research analyst Cameron Kusher says that these figures show that the stamp duty changes have already had a positive impact in stimulating the first home buyer market.
As of 1 July, first home buyers purchasing properties below $650,000 in NSW and below $600,000 in Vic have not had to pay stamp duty.
Quote of the week
Home Listings Slow Down
Housing stock levels are tightening across most capital cities, data from SQM Research shows.
SQM Research property analyst Louis Christopher says, “It is not unusual to record a slight decline in listings in October.
A second surge in November usually occurs prior to the market closing for the year, and so, we expect listings to rise again next month”.
Listings fell by 3% in Melbourne, 2.6% in Darwin, 1.8% in Hobart, 1.4% in Brisbane and 1% in Perth. Conversely, listings rose 5.3% in Canberra, 2.8% in Sydney and 2.6% in Adelaide.
“Overall, the numbers are slightly positive. There is no evidence of any major correction in any city, however the large year-on-year rises in Sydney are demonstrating a downturn,” he says.
New Units at Top of Cycle
New reports from JLL have found apartment development approvals fell 23% in Sydney, 35% in Melbourne and 57% in Brisbane in the year to August.
Lending restrictions have hit the high-density residential market across Australia with the JLL report saying the market was at the top of the supply cycle.
Potentially, as many as 14,400 units could ¬be completed by 2020, but JLL expects fewer than half those units will actually be built.
About 9,000 units have been built in Melbourne this year with another 9,100 under construction. In Brisbane, 4,500 units have been completed and 8,600 are under construction.
“The Sydney apartment market remains resilient with capital values and rents continuing to grow,” according to the report.
Transport Overtakes Resources
New investment projects worth $20 billion have lifted business confidence to its highest point since the resources investment boom peaked in 2011.
Big road and rail projects in the eastern states are leading the investment revival, but a survey of investment projects by Deloitte Access Economics shows there are also signs of a lift in business spending.
Examples of the projects are: Brisbane’s $5.4bn Cross River Rail; the $800 million gas pipeline from Tennant Creek to Mount Isa; and BHP’s $1bn upgrade to its Longford gas plant in Gippsland.
The resource sector has been eclipsed by transport as the biggest destination for investment, with projects worth $95.1bn under construction and a further $27.5bn with firm commitments. There is a further $116bn in transport projects in various stages of planning.